Termination Letter Template (Part 2): Important Considerations-Ontario
Employee Termination Agreement
Please do not take the information provided herein as a legal advice. It is only for informational and educational purposes. But, if you are an employer or employee and require legal advice with respect to employee termination, you should seek professional assistance for sure (e.g. make a post on Dynamic Lawyers). They have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can contact Toronto Lawyer Michael Carabash directly if you need a lawyer.
This is the second of a succession of blog posts he is writing about employee termination. In this blog, he’ll discuss some nuances that we all should be aware of when it comes to an Employee Termination Agreement. In the first blog, he reviewed what these agreements are and how they can be structured.
Very important element to make the agreement valid is called "Consideration". Consideration is something of value awarded by both parties to a contract that induces them to enter into the agreement, it is,like money for goods or services, etc. One party receives something of value and the other party also receives something of value. This makes the contract right, genuine , binding, and enforceable. For an Employee Termination Agreement, the Consideration will be the money that the Employer pays the Employee. This amount could reflect the common law (i.e. judge-made law) or statutory (i.e. Employment Standards Act, 2000) requirements of minimum or reasonable payment instead of notice which the Employer is obligated to provide when terminating an Employee. In exchange for receiving this money, the Employee complies to settle all real and possible disputes and release all claims against the Employer relating to his or her employment and termination.
Defining the "Released Claims"
In the background part of the Employee Termination Agreement, the Employer has the opportunity to describe the claims that are going to be settled and released. Normally, this will associate to claims that could originate from the Employee’s employment or way in which they were terminated. This description becomes a specified term – the "Released Claims" – for ease of reference to be used throughout the rest of the Agreement. While the Employee will want to have a tight, simplified interpretation of the Released Claims (to help cast a wide net of liability on the Employer), the Employer will want a very broad interpretation of the Released Claims (to help reduce the likelihood that the Employee will go after it for future claims).
The first part of the body of the Employee Termination Agreement typically states something to the effect that the Employee agrees to settle and release the Employer in respect of the Released Claims in exchange for money.Examples:
1.The time when the money will be paid (e.g. immediately after signing the agreement, within a specific period of time, quickly but in any event within a few days, etc.)?
2.Presentation and payment of the money (e.g. cash, certified cheque, money order, personal cheque, readily available funds, etc.?) Will it be a lump sum, over time, is there a deposit?
3. Are there any taxes involved that require to be included in the settlement amount?
Release of Claims
After settling the claim, the Employer wants to have a secure release of claims section. The Employer want to be released from past, present, and future claims of any kind and in any forum whatsoever, and also wants its LEGAL REPRESENTATIVES released as well, who can be one or all of:
* Directors and Officers: these are individuals who manage a corporation.
* Heirs: someone who would benefit (under the law) when the Employer dies without a Will.
* Executors / Administrators: a person assigned by a testator to carry out his or her will.
* Successors: Usually used for corporations that succeed and assume the obligations of other corporations
* Assigns: a person receiving the benefit of an assignment, and can include individuals and corporations
Directors, officers, heirs, executors and administrator relate to individuals while successors and assigns can relate to both individuals and corporations. Who exactly will be part of the release will depend on how the Employer carries on business: is it a sole proprietor, partnership, corporation, etc.? If it’s a corporation, it will have officers, directors, employees, etc. to act on its behalf, so they should be in the release. For sole proprietorship, there won’t be any officers or directors.
No Claims, Assignment, Assistance, Admission
supplementary to getting a secure release for both itself and other important persons, the Employer also wants to make sure that the Employee can’t start or maintain any claims respecting the Released Claims. If he or she has started a claim already, it would be wise on the part of the Employer to put in a requirement that the claim (and describe it as best as you can) be immediately released, canceled, settled, etc. with the court at the Employee’s sole expense and that proof of that be provided immediately thereafter to the satisfaction of the Employer. What if the Employee had previously assigned its rights to go after the Employer, for example, to a trustee in bankruptcy? Well, the Employer will want the Employee to give a representation that he or she has not and will not assign his or her rights to be able to go after the Employer. A full settlement first means that the Employee is capable of settling (i.e. that he or she is entitled to go after the Employer but that it will not because of the settlement). Take note: these are contractual terms so a breach of this term could result in damages being sought and awarded. Finally, the Employer wants the Employee to acknowledge that there is no admission of guilt or liability,and to acknowledge that it will not assist any person in any claim respecting the Released Claims. In fact, the only thing being admitted here is that there is no such admission!
Remember: if you need an Employment Agreement or Employee Termination Agreement, you’ve come to the right place. DynamicLawyers have both! The Employee Termination Agreement can be used by an Employer to terminate an Employee’s employment. It is drafted in favor of the Employer: it includes a release of liability, settlement of claims relating to the employment and termination thereof, and includes restrictive covenants (e.g. non compete and non solicitation clauses). Both sell for only $47 and they come with video tutorials and 2 free written guides (the form and the written guides are lawyer-prepared).
Here’s the sample Video Guide that comes with this Employee Termination Agreement:
This information and this sample video guide is NOT legal advice and is provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Lawyers and make a post.